Corn and poultry prices are typically linked because
A. corn is a complement to poultry.
B. corn is an input to poultry.
C. corn is a substitute for poultry.
D. they are alternative outputs.
Answer: B
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When the price level declines
A) the interest rate falls, and consumers borrow more funds, which causes a movement down along the aggregate demand curve. B) interest rates fall, and consumers borrow more funds, which causes the aggregate demand curve to shift to the left. C) the interest rate rises, and consumers borrow fewer funds, which causes a movement up the aggregate demand curve. D) the interest rate is not affected, so there is no movement along the aggregate demand curve.
Which of the following statements about exchange rate is most likely correct?
a. Exchange rates will affect imports and exports but not aggregate demand in the economy. b. Exchange rates will affect imports and exports and thus affect aggregate demand in the economy. c. Exchange rates will affect imports and exports and thus affect aggregate supply in the economy. d. Exchange rates do not affect imports and exports or aggregate demand in the economy.
When the interest rate is so low that the opportunity cost of holding money is zero, then economists say we have reached:
A) the era of total liquidity. B) the zero lower bound situation, which means the U.S. economy may be in a liquidity trap. C) full monetary saturation. D) a situation in which a nation must use caution, since monetary policy is "super" effective.
Which combination of factors would most likely increase aggregate demand?
A. An increase in household indebtedness and a decrease in foreign demand for products. B. An increase in personal taxes and a decrease in government spending. C. An increase in consumer wealth and a decrease in interest rates. D. An increase in business taxes and a decrease in profit expectations.